Newell to cut jobs, shake up executive suite, raise dividend

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Published October 26, 2012

| Reuters

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O – Consumer products maker Newell Rubbermaid Inc said it would cut about 2,000 jobs or slightly more than 10 percent of its staff, over the next 2 1/2 years, joining a slew of U.S. companies trying to counter slowing sales by reducing costs.

The news on Friday came as Newell also reported a higher-than-expected quarterly profit, raised its quarterly dividend by 50 percent to 15 cents a share and announced a number of outside additions to its executive team.

The maker of Sharpie pens and Rubbermaid storage containers is also planning to consolidate manufacturing and distribution facilities and cut the number of its business units to six from nine as part of a second round of restructuring under Chief Executive Officer Mike Polk.

"I see more potential in our business today than I imagined upon joining the company 15 months ago," Polk said in a statement. A former Unilever executive, he became CEO of Newell in July 2011.

As part of the latest restructuring, Polk is reorganizing the company around two broad groups - development and delivery.

The development group will include all of Newell's marketing, insight, design, research and development, and corporate development staff, while the delivery group will consist of its general management, supply chain, and customer and channel development employees.

As part of the changes, Penny McIntyre, who headed Newell's consumer business; Chief Marketing Officer Ted Woehrle; and Chief Customer Development Officer Paul Boitmann will leave the company, it said.

The moves will bring savings of $180 million to $225 million by the end of the second quarter of 2015, the company said. It expects to take related charges of $225 million to $250 million.

In October 2011, Polk announced plans to consolidate Newell's manufacturing plants and distribution centers and to reduce the number of global business units.

The company, whose other products include Graco strollers, Calphalon cookware and Paper Mate pens, has also benefited from a move away from commoditized, lower-margin product categories like shelving and wooden pencils. That effort began under former CEOMark Ketchum.

Newell reported third-quarter net income of $108.3 million, or 37 cents a share, compared with a year-earlier net loss of $177.6 million, or 61 cents a share.

Excluding restructuring costs, tax charges and other items, the profit came to 47 cents a share, beating the analysts' average estimate of 44 cents, according to Thomson Reuters I/B/E/S.

Net sales fell 0.9 percent to $1.54 billion, in line with analysts' estimates. Core sales, which exclude the effects of currency fluctuations, rose 1.5 percent. For the year, the company expects net sales to be flat to up 1.5 percent and core sales to rise 2 percent to 3 percent.

Newell stood by its full-year profit forecast of $1.63 to $1.69 a share, excluding special items.

Earlier this week, companies from Dow Chemical to Colgate-Palmolive said they would cut jobs to protect profits in a weak global economy.

EXECUTIVE SHAKEUP

Also as part of the restructuring, Newell hired several Unilever executives and announced other management changes.

Mark Tarchetti, the former head of global corporate strategy at Unilever, will join Newell in January as chief development officer and lead the new development group.

William A. Burke III, currently Newell Professional's group president, has been appointed chief operating officer and will lead the new delivery group.

Both Tarchetti and Burke will report to CEO Polk.

Unilever executive Joe Cavaliere will join Newell as global chief customer officer. Richard Davies, also with Polk's former employer, will become chief marketing and insights officer.

John Stipancich will remain Newell's chief legal officer and general counsel while taking charge of operations in Europe, the Middle East and Africa.